SET-listed Srithai Superware Plc, the world's largest melamine producer, has changed its business strategy by shifting its focus to mergers and acquisitions (M&A) to double its sales to 20 billion baht over the next five years.
Chairman and president Sanan Angubolkul said the company had for the first time in its 52-year history applied the M&A strategy by buying a plastic pallet factory in Thailand worth almost 100 million baht.
It plans to acquire small companies or competitors in the same business areas Srithai Superware is engaged in, including melamine, plastic pallets, and food and beverage closures.
"Starting from now, we will no longer start our businesses from scratch like we did in the past. We are ready to merge or acquire both small and big companies in order to help speed up our business growth," he said.
The M&A strategy will be used in Thailand and Vietnam, which is the company's strategic area of focus.
''Vietnam remains attractive for Thai investors because the Vietnamese government has welcomed foreign investors and made efforts to adjust its investment laws to be more modern,'' said Mr Sanan.
Moreover, the decision by Vietnam to join the Trans-Pacific Partnership will also benefit the Vietnamese economy, he said.
The M&A strategy is projected to drive Srithai Superware's sales to 20 billion baht over the next five years from 9.9 billion baht in 2015. Of the total, about 60% of sales will come from plastic products, 30% from its melamine business and the remaining 10% from other businesses, including trading and direct sales.
Mr Sanan said the company's sales this year are expected to grow less than 7%, compared to an earlier projection of 7-8%.
The company has moved its moulds and machines for plastic bottle closure manufacturing from Thailand to Vietnam (Hanoi). The machine reinstallation in Vietnam will take another two months to be completed, however, resulting in lost sales opportunities.
Srithai expects its gross profit margin to stay at 18% this year because of its currency exchange loss and lower consumer spending.
In addition, sales of plastic products used in food and beverages dropped by 10% in July because of the economic situation.
The company revised its investment plan in Thailand this year. It plans to spend about 1 billion baht to expand its melamine business, having already allocated some 700 million baht.
SITHAI shares closed last Thursday on the Stock Exchange at 1.99 baht, unchanged, in trade worth 3.4 million baht.